Expect an S&P 500 in the 0-10% range in 2025, says Wharton's Jeremy Siegel

Jeremy Siegel, a Wharton finance professor, expects a subdued stock market in 2025, with the S&P 500 potentially growing between 0% and 10%. He anticipates that the 'MAG Seven' tech stocks may flatten, while smaller and mid-cap stocks might outperform, potentially driven by a rotation away from the large tech giants that dominated the previous two years.

Potential S&P 500 Performance

• 00:04:36 Jeremy Siegel anticipates a much quieter market in 2025 compared to the strong performance of 2023 and 2024. He expects the S&P 500 to be in the 0% to 10% range, with a potential for the 'MAG Seven' and tech to be flattish. This implies a potential 5% to 15% range for the rest of the market.

Impact of Trump's Policies

• 00:00:30 The market's reaction to Trump's policies is a key consideration. While the market may accept an extension of the 2017 tax cuts, further promises of tax cuts could pressure the bond market. Scott Bessent's nomination as Secretary of Treasury was seen as a sign of a more fiscally reasonable approach to the deficit, helping to alleviate concerns about excessive spending.

Reserve Currency Concerns

• 00:02:11 Trump's proposed tariffs on BRIC countries if they introduce a new currency have sparked discussions about the future of the dollar as a reserve currency. Siegel finds it curious that Trump, a supporter of Bitcoin, is concerned about BRIC countries potentially creating a new currency when Bitcoin is already discussed by many nations as a potential alternative.

Potential Market Rotation

• 00:03:53 Siegel observes that the 'MAG Seven' tech stocks may be lagging the rest of the market, suggesting a potential rotation. He wonders if the strong performance of December 2023 was pulled forward into November due to Trump's election, making it harder for the market to reach 6300. This suggests the possibility that smaller and mid-sized cap stocks could gain traction in 2025.

MAG Seven Performance

• 00:05:48 Siegel believes that not all of the 'MAG Seven' stocks will perform well under Trump. For example, Tesla's performance was likely boosted by its association with Trump, but it may not continue to be part of the group. Netflix, while not having the market cap, is also being discussed as a potential replacement for the group.